currently on the low end of wage levels, is in a category by itself because it also represents a large market. China recently became the world’s largest market for air conditioners. China is a country in which the market will expand and in which there will be manufacturing jobs without the need to cross boundaries.
There are concerns that globalization of manufacturing causes the loss of jobs and is counterproductive to the local economy. UTC believes that nothing could be further from the truth. Global manufacturing enables engineering and manufacturing responsibilities to be distributed in such a way that the product is built efficiently. For decades, United Technologies has engineered and manufactured products in Europe and Asia. In recent years virtually all markets around the world demand that products be engineered to meet local requirements and preferences. Currently United Technologies has 125 engineering centers in the United States, Europe, Australia, Asia, and South America. The non-U.S. activities leverage the primary work done in the United States and create export sales. Last year United Technologies exported $3 billion of goods and services while its imports totaled $500 million.
An example of the advantages of global manufacturing is UTC’s purchase of PZL-RZESZÓW (Poland), which has been part of Pratt & Whitney-Canada for 27 years. When UTC won a $1.8 billion contract to build F16 jet engines over a period of 10 years, it bought PZL-RZESZÓW and created a lower cost source location. It became a privatized manufacturing arm of UTC, manufacturing some parts of the F16 engines, among other things. Without this investment, UTC would not have been manufacturing this product. The domestic manufacturing locations (e.g., Connecticut, Georgia, and Maine), where other parts of the F16 engine will be built, would not have been manufacturing them either. Rather than focusing on individual pieces of the overall manufacturing scheme, it is important to understand and visualize the whole picture and the total flow of the manufacturing process.
Previously, it was believed that products made outside the United States were lower cost